Britain's banking crisis may last for almost a decade, a senior Government
minister has warned, as shares in two more of the country's biggest banks
collapsed.

Lord Myners, the banking minister, said the Government's toxic debt scheme will run for at least five years and may last for "eight or nine years".

The value of sterling also fell to its lowest level against the dollar in more than seven years after a well-known investor said the British currency was "finished".

Mervyn King, the Governor of the Bank of England, said on Tuesday that the Bank was preparing to print extra money in a desperate attempt to kick-start the beleaguered British economy.

Shares in Lloyds Banking Group, Britain's biggest bank following the takeover of HBOS, fell by 47 percent at one point - wiping billions off the bank's value. Shares in the bank have now fallen by more than 85 percent over the past year. Shares in Barclays also fell sharply, closing the day more than 20 percent lower.

There is growing speculation that Royal Bank of Scotland (RBS) is set to be nationalised after its shares fell in value by more than two-thirds on Monday. Shares in RBS fell by more than 12 per cent yesterday.

As the pound plunged, Jim Rogers, a former partner of George Soros, the man renowned for his attack on sterling on Black Wednesday in 1992, told fellow investors: "I would urge you to sell any sterling you might have. It's finished. I hate to say it, but I would not put any money in the UK."

The falls have come following a £350 billion bailout package announced by Gordon Brown and Alistair Darling, the chancellor. The centrepiece of the package is a "toxic debt" scheme which involves the Government insuring banks against future losses on bad loans. Ministers have refused to put a cap on the taxpayers' exposure to bad debts which experts fear could be more than £200 billion.

Lord Myners confirmed that the Government was planning to be involved in shoring up high-street banks for almost a decade.

"The duration of the policy will be important, because we need a policy that will take financial markets through this economic downturn and beyond the next cycle," he said. "So we are probably talking about a policy duration of no fewer than five years and probably no longer than eight or nine years."

The minister added that it will take six to eight weeks of intensive negotiations with the banks for the scheme to be agreed. He said that the Government would be employing external accountants, actuaries and lawyers to sift "over a billion items of individual data" from each bank seeking assistance.

The Government had hoped that other countries would launch similar toxic debt schemes to that unveiled in Britain. However, the plan met with a cool reception yesterday at a meeting of European finance ministers.

City experts believe that the toxic debt scheme may not prove enough to alleviate the impact of the credit crisis. RBS said earlier this week that it is expecting to announce losses of up to £28 billion for 2008.

Fears are now growing that other banks will also declare big losses when they announce their results over the next month.

Manus Costello, an analyst at Merrill Lynch, an investment bank, said: "We expect Lloyds Banking to lose money in 2008, 2009 and 2010, largely a result of bad debt provisions."

Simon Maughan, an analyst at MF Global Securities, said the share price falls reflected concerns that other banks may be nationalised. He said: "There are now a number of big banks that are circling the plug hole and the closer that you get to the hole the faster that the water moves."